Why not leave country and bail on student loans?

Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also wrote for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs. See her website SallyHerigstad.com for more personal finance tips and free budgeting worksheets.Ask Sally a question, or read her previous answers in the To Her Credit archive

Dear To Her Credit,
One reads about people who have insurmountable debt
problems, especially student loans. Why not simply move to Canada or Abu Dhabi
and start a new life there? You are not going to have any kind of life here.
-- Wendy

Dear Wendy,
Why not? Other than family and friends, immigration requirements, love of country and
a bit of inconvenience, I suppose there's no reason a person shouldn't move to
another country and leave their debts behind.

But it's completely unnecessary.

I know things have been tough. Recent graduates have to
contend with both the highest levels of student loan debt ever, thanks to
insanely high tuition costs and a difficult job market. Many of them feel as if they were promised that if they just stayed in school, no matter the cost,
they'd be rewarded with a job with high pay when they were done.

Instead, college graduates often end up working outside the
field they trained for, making wages a lot closer to minimum wage than to the
salaries they'd hoped for. Even young adults who get the jobs they wanted can
discover that their paychecks don't go far. By the time they pay taxes,
it's hard to make those student loan payments.

Thus, the temptation to run away to Canada or Abu Dhabi. I
wouldn't even know how to move to Abu Dhabi -- especially if I was short on
money. I could get to Canada on half a tank of gas, but staying there may be
harder. The best option for staying legally in Canada is on a Skilled Worker
Visa, which requires people to prove that they have a high level of skills that
are needed in Canada.

There's no guarantee a collector won't try to make debtors
pay even after they move to another country, either. It will be much more
expensive to collect from across the border, but a debtor may find herself still
looking over her shoulder at debt that isn't really going away.

Some people do move to another country to escape debts. For
most of us, it isn't that easy or practical, however. People in such situations
may want to look at some more realistic options, such as:

Asking for a longer-term loan, or a loan with lower
payments during the early years when you are establishing your career.

Asking for forbearance if you cannot pay anything; for
example if you are unemployed and have no income.

Seeing if you qualify for a repayment plan based on your income.
Under this type of plan, payments shouldn't be more than you can afford, based
on program calculations.

Working in a field, such as teaching or military service,
that allows you to have your balance erased after a certain number of years.
Working in some special needs areas allows some people to have their loans
erased completely.

Considering bankruptcy if you have significant other
debts. You aren't likely to have your student loan erased in bankruptcy, but by
losing other debts, you may free up money to make student loan payments and
still pay your bills.

The best solution, of course, would be for graduates to
reach for and achieve the career and financial success they hoped for when they
decided to go to college. Success may
look different or take longer than they thought it would. People who refuse to
give up, and who go over, under or around every obstacle in their path, can
still find a way to resolve or pay their student loans -- and they can
definitely create a worthwhile life for themselves here.

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Published: July 5, 2013

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